Savaria Corporation

I would like to welcome everyone to Saverio Corporation's first quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you need to press star 101 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 101 again. This call may contain forward-looking statements which are subject to a disclosure statement contained in Severia's most recent press release issued on May 7, 2025, with respect to its first quarter 2025 results. Thank you, Mr. Bourassa. You may begin your conference.

Thanks, Victor, and good morning, everyone. So today we'll start with a small recap of our Q1 results, then Steve will update us on financial, and JP will do an update on Severia 1, then follow that with a Q&A session. So once again, I'm very proud of our Q1 results. It showed that the transformation is stable for a fifth good quarter in a row in an environment where uncertainty, where all our products are UMSC compliant, meaning that there's no duty applicable on all our finished products. So some of the key highlights for the first quarter. So fantastic performance at 18.5% of EBITDA in our weakest quarter, which is always Q1 due to winter, the numbers of working days, so quite proud of our Q1. Looking back at the mirror, we can see that the last 12 months, we're trading at 19% of a bid up, which really showed the improvement on the severe one, which GP is going to highlight later. And we are getting closer to the goal of severe one, which was to be at 20%. As you can see in the DNA, we did not change our guidance due to economic uncertainty and tariff noise, but let's remain assured that we want to finish at the top of the bracket. So growth in North America was, once again, strong, 11.8%. While in Europe, it was slightly negative. I think the reset is almost done. And patient care had a modest growth of 2.1% after a fantastic Q4 last year. We know it's important to grow, and this is part of the pillar for 2025. And we're confident we'll be able to achieve that because of new product launch, a growing share of wallet with our dealer, and onboarding some new dealers as well. So talking about new product, we started to assemble a Luma home elevator at our factory in Mexico, which we expect SAIS to, in the coming month, to be able to ramp up as we train our dealer in our SAIS team. Product is looking outstanding. It's a product that will be sold worldwide, easy to install, stockable for the dealer that want to stock it, so bring a lot of key advantage to a dealer. Debt ratio finished at 1.5 in Q1. Now we have an available fund, or at least before last night, of $254 million at the end of March 31st, which put us in a very good position to make some investment or acquisition. So talking of acquisition, as you can see this morning, we have closed a small token, Western Elevator. It was one of our long-term dealers in B.C., Canada. And it was strategic for us as it continues to solidify our position in the B.C. area with our own direct store of Garaventa and their own direct store with Western. That's also to add to bring some additional volume as they were not buying other products from Savaria. Their annual sales were approximately 7.5 million Canadian. So welcome to all the new employees in BC. And as also you can see in our press release, we decided to invest $30 million Canadian in Greenville to expand our factory there so that we have a new 55,000 square foot available in the second half of next year. This is on top of the 60,000 square foot that we have free up in the last quarter in Q1. And we have started to assemble our Eclipse home elevator as of April 4th. Because regardless of tariff, we wanted to assemble more in the U.S., and that's what we have done in the first quarter. So thank you very much to the team in Greenville and Toronto for the speed of execution. That was an outstanding launch. So on that, thanks to all our employees in Savaria and our dealers for the fantastic Q1. Steve, financial, please.

Thank you, Sebastian, and good morning, everyone. I'm excited to share some remarks regarding our Q1 2025 consolidated financial metrics. So the key highlights for the quarter include a record first quarter for EBITDA by a wide margin. Our EBITDA grew by $6 million, or about 17%, to $40.6 million for the quarter. As Sebastian mentioned, Q1 is typically a soft quarter for us, and yet, in spite of the external context and threat of tariffs, our results are very strong. Revenue growth of 5.2%, with particularly strong results of 11.8% growth in North America accessibility. Part of the benefit here is favorable FX rate movement, but this also shows that we're well diversified. In addition, gross margin increased by 180 basis points to 37.8%, and our EBITDA margins increased 190 basis points to 18.5%. These are very strong results for a Q1. Our trailing 12-month adjusted EBITDA margin is now 19%. And lastly, strong cash flow with operating cash flows of up 18% versus last year. Thanks to our financial discipline and improvement in working capital performance, we were able to lower our leverage ratio of net debt to adjusted EBITDA to 1.49 from 1.63 at the end of 2024. So now, starting with consolidated revenues for the quarter, we generated revenues of $220.2 million, an increase of 5.2% versus last year. This growth is driven by 0.8% organic growth, positive foreign exchange impact of 3.3%, and an acquisition impact of 1.1%. Our accessibility segment had growth of 6.1% in a quarter, driven by an 11.8% growth in North America, partially offset by a contraction of 2.8% in Europe. North America was able to deliver constant revenues in a more uncertain market environment. We've made a number of changes to our sales strategy in Europe in Q1 of 2024, so we have tough comparables. but we are very excited for the future, especially as we introduce new products into the market, including the new Luma and the MultiLift. Patient care had modest growth of 2.1% in the quarter and came off of a very strong Q4 2024. This business is significantly project-based and can be lumpy, and positive news that our backlog also grew significantly during the quarter, which bodes very well for future quarterly sales. The net acquisition impact, as mentioned, of 1.1% was driven by the MATOT-branded dumbwaiters and material lifts, which we acquired in April of 2024. As previously stated, our consolidated gross margin for the quarter was 37.8%. This performance represents a marked improvement of 180 basis points over prior year and a 10 basis point improvement over Q4 2024. driven by continued operational efficiencies realized under SEVERIA 1. Both accessibility and patient care segments contributed to this improvement, underscoring the effectiveness of our ongoing initiatives to streamline operations, enhance margin quality, and drive sustainable growth. This gross margin improvement is possible due to SEVERIA's vertically integrated operating model, and therefore more protected from inflationary pressures, as well as Severia One initiatives that are improving all aspects of the business. Adjusted EBITDA was $40.6 million for the quarter, representing the fourth quarter in a row above the $40 million threshold. Adjusted EBITDA margin finished at 18.5% for the quarter. This represents an improvement of 190 basis points over Q1 2024, and as noted earlier, our trailing 12 months adjusted EBITDA margin is now 19%. Both accessibility and patient care saw improvements in adjusted EBITDA margin. This performance enhancement is primarily driven from the improvements in gross margin previously mentioned. We incurred $4.7 million in strategic initiative expenses for the quarter in line with our expectations, and these fees are mainly consulting fees similar to last year and will repeat for the next three quarters, but will end in Q4 of 2025. Finance costs were $3.5 million for the quarter compared to $2.3 million last year. Interest on long-term debt decreased by $1.4 million due to reduced interest rates on our debt as well as a lower overall debt balance versus last year. The driver of the year-over-year increase in total finance costs is a larger unrealized gain that we had in Q1 of 2024 last year versus a smaller gain in Q1 of 2025 this year, the difference being $2.4 million. I'm now going to look at and discuss the balance sheet and cash flow. So cash flow from operations in Q1 was $31.3 million, which is an increase of $4.7 million versus last year coming from higher EBITDA. We reduced working capital by $2.2 million in the quarter, coming mainly from higher trade payables. CapEx for the quarter finished at $4.7 million, which is 2.2% of sales and in our target range of 2% to 2.5% of sales. Free cash flow after debt-related costs and dividends was $10.3 million for the quarter, which is $3.8 million, or 58% higher than prior year. The strong free cash flow contributed to repaying a debt of $7.5 million and reduced our leverage ratio to 1.49 and better prepares us for any opportunities that lie ahead. With regards to our guidance, Due to continued uncertainty regarding tariffs, we're keeping our 2025 guidance unchanged with projected revenues of approximately $925 million and an expected adjusted EBITDA margin between 17% and 20%. And with that, this completes my prepared remarks. I'll now turn the call over to Jean-Philippe, our CTO, to provide further details on how we're progressing with Sverige 1.